Car title loans are great when you need cash and have a car you can use as collateral. When you take a loan like this, you will be placed on a payment plan. This payment plan is an installment loan, which means you will need to make regular payments each week or month. The nice part about car title loans is that they offer the perfect way to get cash if you have bad credit and cannot qualify for a personal loan from a bank. As long as you pay the loan as scheduled, you will have no problems, but there are several issues you can have if you fail to repay the loan. Here are the problems you may encounter if you cannot make the payments on time.
The Lender Can Keep Your Car
To get a title loan, you will need to turn in the title to your car to the lender. In return, the lender will give you cash and will set up a payment plan for you. All you have to do to get the title back is make all your payments on time. If you fail to do this, the lender has the right to keep the title to your car, and this means the lender can actually repossess the car.
Car repossession is the process a lender uses to seize a car from the person who has possession of it. The lender will not do this without notifying you first, because the lender will want to give you every opportunity possible for you to make the payments you own. But if you ignore the lender and fail to make the payments, the lender is likely to repossess your car.
The Lender May Come After You For The Deficiency
A deficiency on any type of loan is the amount owed versus the amount the lender receives when selling an asset. If you owe money on a car title loan, the lender can come after you for the deficiency, and this is true even if your car is repossessed. After repossessing the car, the lender will most likely sell it. If the amount the lender collects is enough to pay off the amount you owe, the lender will not typically come after you for the remaining balance of your loan. This is primarily because the lender would not lose money in this case.
On the other hand, if the lender has to take a loss on the sale of the car, they will probably come after you. For example, if you owed the lender $1,000 for the car and they could only get $300 when selling the vehicle, they may come after you for $700, which is the difference (also called the deficiency).
The Lender Could Take You To Court
It's also important to realize that if this happens, the lender can sue you by taking you to court. If the court agrees with the lender, the court may place a judgement against you. This judgement will appear on your credit report, and you will have to pay it if you want to settle the matter. In addition, if a lender has a judgment against a person, the court will usually allow the lender to garnish the person's wages if he or she fails to pay the amount due.
While hearing how lenders can handle non payments may seem like bad news, the good news is that you can avoid all these issues. All you must do is make the payments on your loan.
Getting a car title loan is easy and fast, and it offers an ideal way to get cash when you really need it. If you are interested in learning more about car title loans, contact a lender today, such as those at Flexible Finance.